Binaries Option Learning Course

We currently trade at This Broker. After testing several
Binary Options and CFD platforms we find this one to be the most suitable for us. What made the difference is a unique feature that allow us to watch and copy the strategies and trades of the best performing traders on the platform. You can actually see each move the "Guru" traders make. This method works nicely for us. Since we started trading at this broker we noticed an increase of our successful trades and profits when compared to our former brokers. You may want to check them out.

Please note that all trading involves risk. Only risk
capital you're prepared to lose. Past performance does not guarantee future
results. This post is for educational purposes and should not be considered
as investment advice.

Learn How to Trade

So how do you trade binary options (BO)? a Binaries Option trade calls for several decisions to be taken by the investor.

Deciding on the Underlying Asset
The first decision is choosing an asset. Based on which broker you decide on, you will have a selection of assets from different financial markets. Some traders elect to focus on one particular asset, or one market, while others trade several contracts simultaneously. One consideration as to what asset to trade has to do with the opening hours of the various world stock exchanges. Currencies are usably available for trade 24 hours a day.

Most brokers allow for a low minimum so you can be flexible as to the amounts you can invest. The amounts you devote to trade should be dictated by your risk management plan (more on this when we talk about risk management in a different article regarding money management).

Deciding On the Desired Time Frame

BO are short term investment instruments by definition. The time frame available can run from one minute to a week, depending on the trading platform.

So what time frame should you choose? The problem with selecting very small timeframes like one minute, or 5 minutes is that you could possibly experience a lot of “noise” which is a result of hedge funds activity, scalpers and automated trading. You could think that you observe an emerging trend only to realize that it was only a brief manipulated move and that the trend is over once you enter the market. Therefore I suggest you use at list a 15 minute time frame. This is small enough for you to capture the nice moves, but it's big enough to eliminate the noise in the market and correctly displays the “true trends.”

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While preparing a trading strategy (we will cover this in another article), it is best to experiment with various timeframes. A trading strategy that doesn't work on a small time-frame might work on a larger time-frame and vice versa. Start developing your trading strategy using 15 minute timeframes, and if you're unhappy with the results simply experiment with other timeframes.

Deciding on the Type of Trade

BO Platforms allow for several trading types:

Above / Below
Above / Below is the most popular type of BO trade, most traders will use this type the majority of the time. Above/Below contracts expire in-the-money when the trader correctly predicts that the price of the underlying asset will move above or below the predetermined strike price by the time of expiration.

Let's look at a trading example: while looking at the assets available for trading you choose Gold as the asset you would like to trade. Following an analysis (that we will discuss in another article) you come to the conclusion that Gold is currently trending up.

Since you believe that the price of Gold will increase, you choose Call/up with an expiration time of 15 minutes and an amount of $100. You observe that the payout for this trade is 81%. If when the contract expires the price of Gold has risen, you'll finish in-the-money and take home the amount of $181.

Touch

With the Touch type contract expire in-the-money if the price of the underlying asset touches a predetermined barrier by the time of expiration. Price barriers can be higher or lower than the current price of the underlying asset when the option is purchased. Binary brokers also offer variations on Touch, including “Touch Up” and “Touch Down”.

Let's look at an example: suppose you decide to choose a touch option on Google's stock. You select Google as the asset you would like to trade and see that the expiring in 15 minutes with a return of 71%. Depending on the current price of the asset, two contracts are available with predetermined strike prices, “Touch Up” and “Touch Down”. You believe that the price of the underlying asset will touch the high strike price until the expiry date, so you select “Touch Up” and a trade amount of $100. On the other hand, if you believed that the price of Google would touch the low strike price, you would select “Touch Down”.

If when the contract expires the price of Google has touched the option you selected, you'll finish in-the-money and take home a payout of $171.

Range

Range have a predetermined upper and lower boundary. When buying a range contract, the trader have to predict whether the price of the underlying asset will stay “In” or go “Out” of a predetermined range at the time of expiration. in a range you can trade on the volatility of the asset. If you think that the asset volatility is high, you will choose an “Out” of the range. On the other hand, if you think that the option is not volatile, you will buy an “In” range option.

Let's look at an example: You decide to trade a Forex contract, USD / EUR. You see that there are two available, “In” and “Out”. Each has a predetermined range and you must determine if the asset will be in the upper or lower range at the time of expiration.

Based on your analysis you think that the price of the USD / EUR will be in the range at the time of expiration so you select the “In”. If you thought that the price would be out of the range at the time of expiration, you should have bought an “Out”.

If when the contract expires the price of USD / EUR stayed in the predetermined range that you selected, you'll get the predetermined payout amount

Additional Features

Some brokers will allow for some variations on the trading types. This may include: 'Close Now' and 'Extend'. Note that both features require that you pay a flat fee upon implementing.

Close Now - this feature allows you to sell before the time of expiration. This enables you to close a contract before the time of expiration if it isn't performing as planned.

Extend (Roll Over) - allows you to extend the time of expiration in order to increase the odds of being in-the-money.

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